Asian shares mostly higher after US rally, aid package hopes

TOKYO (AP) — Asian shares were mostly higher in muted trading yesterday, as worries about the pandemic kept optimism in check despite a rally that closed out last week on Wall Street.

Investors growing wary over upcoming earnings reports have been cashing in recent gains, helping pull Japanese shares lower. Tokyo’s benchmark Nikkei 225 index lost 0.3 per cent to finish at 23,558.69. Big exporters logged some of the largest losses, with Toyota Motor Corp falling 0.8 per cent and Honda Motor Co shedding 1.8 per cent.

Japan reported core private sector machinery orders edged 0.2 per cent higher in August, contrary to forecasts for a decline. But overall, economic indicators remain weak.

Other regional benchmarks were rising. South Korea’s Kospi gained 0.5 per cent to 2,403.12. Australia’s S&P/ASX 200 gained 0.5 per cent to 6,132.00. Hong Kong’s Hang Seng jumped 2.2 per cent to 24,654.77, while the Shanghai Composite added 2.4 per cent to 3,350.22.

“While United States (US) politics remain centre stage, a string of Asia releases and monetary policy meeting decisions will be watched this week,” said Senior Market Strategist at IG in Singapore Jingyi Pan, referring to central bank meetings in South Korea, Indonesia and Singapore.

Indicators out of China, such as trade and inflation readings, also remain on investors’ minds.

People walk past a bank’s electronic board showing the Hong Kong share index at Hong Kong Stock Exchange. PHOTO: AP

Wall Street closed out its best week in three months on Friday as negotiations on Capitol Hill aimed at delivering more aid to the ailing US economy encouraged investors. The S&P 500 rose 0.9 per cent to 3,477.14, its third straight gain. The benchmark index ended the week with a 3.8 per cent gain, its strongest rally since early July.

Signs as of late Sunday were not promising. A new White House coronavirus aid proposal got bad reviews from both ends of the political spectrum. House Speaker Nancy Pelosi rejected the most generous Trump administration plan to date as “one step forward, two steps back”.

The Republicans who control the Senate are dismissing it as too expensive and a political loser for conservatives.

On Friday, the White House increased its offer to USD1.8 trillion, up from USD1.6 trillion, according to a Republican aide familiar with the plan. Pelosi’s most recent public proposal was about USD2.2 trillion, though that included a business tax increase that Republicans won’t go for.

Worries persist that Congress and the White House won’t deliver more support for the economy as it reels from the impact of the pandemic and concerns that stock prices simply got too high during the summer.

Economists said the outlook is grim without such support, and the chair of the Federal Reserve has said repeatedly it will likely be necessary.

The Dow Jones Industrial Average gained 0.6 per cent to 28,586.90, creeping into positive territory for the year. The Nasdaq composite climbed 1.4 per cent, to 11,579.94, while the Russell 2000 index of small-company stocks jumped 0.6 per cent to 1,637.55.

Other major challenges remain, chief among them the still-spreading coronavirus pandemic, highlighted by Trump’s own COVID-19 diagnosis.

In energy trading, US benchmark crude lost 45 cents to USD40.15 a barrel in electronic trading on the New York Mercantile Exchange. It lost 59 cents to USD40.60 per barrel on Friday.